NEW YORK (AP) — Mosaic's stock declined Monday after the company said that it is delaying a potash fertilizer project's expansion and favors using cash for buybacks over special dividends.

THE SPARK: Mosaic Co. is deferring the final 2 million tons of its potash expansion strategy because of unfavorable market conditions, said CFO Lawrence Stranghoener on a conference call with analysts. Stranghoener said that the projects are expected to resume once market conditions warrant the additional capacity.

The company also said Monday that it expects to have about $2 billion in surplus cash at the end of the month. Mosaic favors using the surplus cash for stock buybacks over special dividends that would be paid on top of its regular dividend.

The company currently pays a 25-cent quarterly dividend that it said it expects to increase over time as its earnings grow.

Dividends return money directly to shareholders, while buybacks can help support a company's earnings per share.

THE BACKGROUND: Mosaic, which is based in Plymouth, Minn., sells potash and phosphate fertilizers.

In its most recent fiscal quarter, potash sales rose 37 percent to $758 million, despite lower prices, as volumes rose.

THE ANALYSIS: Investors may have been disappointed by the company's guidance for its cash surplus, said P.J. Juvekar of Citi Investment Research. But the potash delay may be a good move for Mosaic and the broader fertilizer industry, the analyst said. Juvekar expects higher potash supply, which could weigh on prices, over the next five years because of projects from competitors.

Mosaic can spend the money it would have spent on increasing capacity on buybacks, Juvekar said.

SHARE ACTION: Shares of Mosaic fell $1.81, or 2.9 percent, to $61.47 in afternoon trading. The stock is still up about 8.6 percent in 2013. It has traded from $44.43 to $64.65 over the past 12 months.